Mhe inheris a house after his father dies. His fathers adjusted basis fh the house \( \$ 175,000 \), and the house ls worth \( \$ 265,00 \) when his father dited. What is Mises basis? \[ \$ 0 \] \( \$ 175,000 \) \( \$ 220,000 \)

When Mhe inherits the house, his basis in the property is generally the fair market value (FMV) of the property at the time of his father's death, rather than the adjusted basis of the property that his father had. In this case, the FMV of the house at the time of his father's death is $265,000. Therefore, Mhe's basis in the house is $265,000. If Mhe later sells the house, his basis is crucial for calculating capital gains tax, making it essential to understand how inheritance works regarding property basis. The step-up in basis rule means that he will only pay taxes on the appreciated value above the FMV at inheritance. In real estate, understanding basis can be a game-changer for tax purposes! When selling inherited property, it's essential to keep meticulous records of the fair market value at the time of inheritance, as well as any improvements made to the property since then. This information will help calculate capital gains accurately and potentially minimize tax liabilities. Always consider consulting with a tax professional to make the most of these benefits!